[Click eStock] "IS Dongseo, Construction Sector Growth Expected... Target Price Up 12%"

Shinyoung Securities Report

[Asia Economy Reporter Minji Lee] Shin Young Securities maintained a buy rating on IS Dongseo on the 9th and raised the target price by 12% from the previous level to 63,000 KRW. This is based on the judgment that after successfully turning around last year's performance, the company is maximizing its return on equity (ROE) through rapid turnover of land assets.

Last year, IS Dongseo's sales and operating profit reached 1.2008 trillion KRW and 207.9 billion KRW, respectively, growing 56% and 188% compared to the previous year. Sales in the construction sector increased by 76% year-on-year to 883.4 billion KRW due to the resumption of the pre-sale business.

This year is expected to see even greater growth than last year. Construction sector sales are projected to grow at an average annual rate of 54% over two years, reaching 1.1512 trillion KRW this year and 1.9637 trillion KRW next year. From this year, the progress rate of major subcontracting projects is entering the latter stages, contributing to sales growth. Major subcontracting projects include Daegu Beomeo W (680.2 billion KRW), Busan Ocean Life (247.7 billion KRW), and Busan Bongrae (237.7 billion KRW).

Self-developed land projects are also expected to contribute to performance as development starts faster than planned. These include Gyeongju New Centro (359.8 billion KRW), which was pre-sold in December last year, and Ulsan Deokha 1 and 2 districts (900 billion KRW), scheduled for pre-sale in the first quarter of next year. Researcher Sera Park of Shin Young Securities said, “The profitability of these projects has improved compared to the initial development plans, leading to upward revisions in both project scale and profitability.”

Last year, the company also stood out in the environmental business sector with acquisitions such as Paju B&R and Youngheung Industrial Environment by Inseon ENT. Recently, with an increase in construction starts, the business environment related to construction waste for Inseon ENT is also improving. Researcher Park stated, “The concrete pile business is also expected to return to operating profit this year, with pile unit prices rising since December last year,” adding, “Along with the external growth of the construction sector, improvements in other business segments' performance are also anticipated.”

This content was produced with the assistance of AI translation services.